CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Stakeholders Rights
Narmada Power Ltd's Stakeholders Relationship Committee took up a debenture-holder's complaint about delayed interest, acted on it in good faith, but could not resolve it before the year-end. The debenture-holder alleges the company contravened Section 178. What is the legal position?
Inability to resolve or consider a grievance in good faith is not a contravention of Section 178, according to the proviso to sub-section (8). Because the committee acted in good faith, the company and its officers are not liable for the unresolved complaint.
- AInability to resolve or consider a grievance in good faith does not constitute a contravention of the sectionCorrect
- BAny unresolved grievance automatically attracts the penalty prescribed for contravention
- CThe committee members are disqualified from holding office for the unresolved grievance
- DThe company must dissolve the committee and reconstitute it with independent directors only
Explanation
The proviso to Section 178(8) states that inability to resolve or consider any grievance by the Stakeholders Relationship Committee in good faith is not a contravention. The committee acted in good faith, so no penalty applies. The penalty distractor ignores this proviso.
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